The tech giant Apple, Inc., is currently grappling with multiple challenges, notably in China and with declining iPhone sales. Bloomberg's columnist Mark Gurman revealed in a newsletter that China poses a significant problem for Apple due to a ban on foreign brands within government workplaces and a change in Chinese consumers' preference towards domestic technology. Following a 13% decrease in China sales during the December quarter, Apple is bracing for another decline in the upcoming quarter, as shared by the columnist.
Gurman explained the main issues in China revolve around the difficulty of growing Apple's user base in the region and persuading current users to upgrade their devices more frequently. One reason for the slowdown in iPhone upgrades, according to Gurman, is the lack of significant changes in Apple's product lineup since the 2020 iPhone 12 launch. The shift in focus towards services and accessories by Apple has further diverted attention away from iPhone innovations, ultimately leading to stagnant sales growth for the company.
Given the absence of a groundbreaking new product category in the foreseeable future, Gurman suggested that Apple might consider producing a more affordable version of the iPhone to target emerging markets. Past attempts by Apple to lower iPhone prices like the iPhone 5c and the current iPhone SE were highlighted by Gurman, indicating the need for a revamp in the budget-friendly iPhone category to compete with Chinese brands offering more features at lower prices. Gurman proposed potential strategies for Apple to release a modern, cheaper iPhone, emphasizing the importance of making the brand accessible in developing nations and paving the way for upselling higher-end devices. Although concerns about diluting Apple's premium brand have stalled such ventures in the past, Gurman emphasized the necessity for Apple to diversify its market presence beyond China by introducing a more affordable iPhone.